Toward a Theory of Negotiation Precedent

Abstract

It is remarkable that precedents and their use have not been well explored within the negotiation literature. In this article, I examine the sparse knowledge of precedents and offer a preliminary framework for understanding the role of precedents in negotiation, including how negotiators establish and apply them. Precedents can either evolve randomly or be created with strategic intent. Understanding precedents generally involves examining how negotiators build, adopt, avoid, and reject them. In this review of the existing literature, I identify twelve concepts and paradigms that are particularly relevant to our understanding of negotiation precedents. I also establish a research agenda and identify three methods for further developing our knowledge of precedents: applying path dependence theory from the field of international relations to a negotiation context; conducting experimental research in a laboratory setting involving subjects engaged in negotiation exercises that contain opportunities to apply precedents; and conducting field research with a focus on case methodology grounded in negotiation linkage theory and theories of negotiation dynamics. Finally, in this article, I formulate a two‐part framework on building and applying precedents, and offer managerial guidance for the negotiation practitioner. Precedents serve as a strategic technique and provide a source of power at that point in a negotiation when decisions are made.

Precedents in Negotiated Decisions: Korea–Australia Free Trade Agreement Negotiations

“…Otherwise, the case law literature is not particularly relevant, because negotiation processes are much more flexible than judicial processes and subject to far fewer external controls. A precedent may provide a firm rule in some negotiation circumstances—last weeks' price, for example, greatly determines the price offered today in many economic sectors—but the dynamics of negotiation are much more varied and diverse than those found within a courtroom (Crump ).…”

“…Precedents come into existence through evolution and also when negotiators strategically build them. Negotiators can apply precedents by seeking to use them within a negotiation but may also seek to avoid or refute the relevance or validity of a precedent (Crump ).…”

“…Studying negotiation precedents requires examining negotiations from a temporal perspective because precedents are developed when negotiators draw on the past to influence the present or take action today to influence perceived future negotiations. Seeing negotiation from a temporal perspective can pose research methodological challenges because negotiation research is generally focused on the present—static or dynamic—and does not often venture into linkages between past and present or present and perceived future (Crump ).…”

“…One frame through which we can examine the temporal dimensions of negotiation is negotiation linkage theory, which seeks to identify and explain the strategies negotiators use when separate but linked events are connected to negotiations that occur consecutively over time (Crump ) and concurrently in time (Crump ). Researchers have extensively explored the role and significance of alternatives in negotiation, especially the best alternative to a negotiated agreement (BATNA; see Sebenius 2017 in this issue).…”

“…We note that no previous study within the literature has sought to build a theory of negotiation precedents based on empirical observation. In a previous study, the first author (Crump ) developed a framework for conceptualizing negotiation precedents, but was only able to do so through a comprehensive literature review. In this study, we seek to build on that previous work by proposing a tactical framework via empirical methods.…”